By Emily Chasan

NEW YORK (Reuters) - Corporations are starting to look at their distressed brethren as potential acquisition targets, hoping that strategic deals can grow their businesses, according to the co-head of Blackstone Group's (BX.N: Quote, Profile, Research, Stock Buzz) restructuring and reorganization advisory group.

"We are definitely seeing strategic buyers, and we definitely are representing strategic buyers," Timothy Coleman said at the Reuters Private Equity and Hedge Funds Summit in New York on Tuesday. "Whether those deals get done and when they'll get done will depend on price."

While many typical distressed investors, like private equity and hedge funds, have been wary of putting investment capital into troubled companies, corporate buyers may have a unique opportunity, Coleman said.

"If you're an investment-grade company today, you're borrowing at probably the cheapest level you have borrowed at ever, or certainly in a very long time," Coleman said.

Such access to cash could make companies look to pick up corporate assets on the cheap.

"There are a lot of strategic people, domestically and internationally, that have seen this as a great opportunity," he said.

Corporate buyers have shown up more frequently at bankruptcy auctions in the last few weeks.

Last week Valero Energy Corp (VLO.N: Quote, Profile, Research, Stock Buzz) beat out Archer Daniels Midland Co (ADM.N: Quote, Profile, Research, Stock Buzz) in an auction for many of the assets of bankrupt ethanol maker VeraSun Energy Corp (VSUNQ.OB: Quote, Profile, Research, Stock Buzz). And India's Sterlite Industries (STRL.BO: Quote, Profile, Research, Stock Buzz) is buying bankrupt U.S. copper miner Asarco LLC for $1.7 billion.

On Monday, accounting firms PricewaterhouseCoopers PWC.UL and Deloitte DLTE.UL said they had deals to buy assets of bankrupt consulting firm BearingPoint Inc (BGPTQ.OB: Quote, Profile, Research, Stock Buzz), subject to the bankruptcy court process.

But while corporate buyers are starting to bite, many distressed investors are mostly "sitting and waiting," despite having raised billions of dollars for distressed investments, Coleman said.

"You're starting to see a little of (distressed investing), but not what we thought we would see by now," he said.

"I think those who went into the mortgages early, found themselves early and burned, and I think that people are more cautious today."

While Coleman said investors are looking, most of the distressed deals investors have made in the cycle so far have not been billion-dollar deals.

"The money is there and it is starting to show up, but I can't think of examples of people putting large amounts of money in," Coleman said.

(Editing by John Wallace)

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